Retiring at 55 While The Rest of You Work to Pay My Pension

November 20, 2008

Pictured above is a group of retired teachers celebrating in Georgia after they blocked efforts to change the automatic rate of increase in their pension benefits.  According to the Atlanta Journal Constitution, since 1969 teachers in Georgia have enjoyed twice-annual automatic increases of 1.5% in their pension benefits.  After losing $11 billion since July 1 in the $41 billion pension fund, Governor Sonny Perdue floated the idea that the rate of increase might need to vary depending on economic conditions.  No dice, said outraged teachers.  We paid in and are entitled to that money. 

Never mind that because teacher pensions are usually defined benefit plans, the amount they receive can be substantially more than what they paid in plus the return on that money.  This is especially true when the returns on investments have been lousy, as has been the case recently.  And if the pension funds come up short the taxpayer is on the hook to pay the benefits.  The angry teachers don’t care.  Gimme!

And politicians have incentives to promise too much in pension benefits because of electoral threats from teacher unions.  The AJC piece nicely documents the electoral pressure: “Steve Jackson, 62, a retired Villa Rica social studies teacher, held a sign at the entrance of the Retirement System Offices. It read ‘betrayal’ and ‘teachers never forget.’  ‘We feel like Sonny (Perdue) wouldn’t be governor without the teachers support,’ Jackson said. ‘He promised things to the teachers. We feel very betrayed.’”

Notice that Jackson is retired for we don’t know how long at the age of 62.  In fact, teachers in most states can retire with full benefits in their mid-fifties.  In Missouri, for example, a teacher can retire in her mid-fifties with 30 years of experience and receive 75% of her highest three years of salary (plus increases for inflation) for the remainder of her life.  And since a woman at the age of 55 can expect to live another 28 years, she can expect to receive pension benefits for about as many years as she worked.

Meanwhile, the rest of us have to work longer before retiring, both to compensate for losses we may have experience in our defined contribution plans and to pay the taxes to bail out the excessive promises made to teachers.  Just picture this:  there are people who will have to work well into their seventies to pay for teachers who retire in their mid-fifties.

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Posted by Jay P. Greene

PJM on Candidates’ Education Flip-Flops

November 3, 2008

(Guest post by Greg Forster)

Over the weekend Pajamas Media carried my column on how Obama and Palin have flip-flopped on education:

Suppose I told you Candidate A has supported rigorous academic standards, has stood up to the teachers’ unions — even been booed by them at their convention — and proclaimed the free-market principles that schools should compete for students and better teachers should get higher salaries. On the other hand, Candidate B says that competition hurts schools, that kids should be taught a radical left-wing civics curriculum, that we should throw more money at teachers’ unions — excuse me, at schools — and that rigorous academic standards should be replaced with the unions’ old lower-the-bar favorite, “portfolio assessment.”

Candidate A is Barack Obama. So is Candidate B.

Meanwhile, Candidate C has made an alliance with the teachers’ unions, opposed school choice, thrown money at the unions — excuse me, at schools — and even helped undermine a badly needed reform of bloated union pensions. On the other hand, Candidate D has broken with the teachers’ unions, demanded that schools should have to compete for students, and endorsed the most radical federal education reform agenda ever proposed by a national candidate, including a national school choice program for all disabled students.

Candidate C is Sarah Palin. So is Candidate D.

Important disclaimer:

None of this implies anything about the overall merits of any of these candidates. One can love a candidate overall while hating his or her stand on education, and vice versa.

1 Comment | competitive effects, money myth, politics, school accountability, social promotion, special ed, teacher pay, teacher quality, teacher union, vouchers | Tagged: , , , | Permalink
Posted by Greg Forster

Paying the Pension Piper

October 27, 2008

According to an analysis of public (including teacher) pensions by Northern Trust reported in the Washington Post, those pensions lost 14.8% of their value for the year ended September 30.  They have almost certainly lost more during October in line with the continuing drop in stock prices. 

The decline only compounds a serious problem.  Even before this year’s market fall many teacher pension plans were under-funded.  According to the Post, the GAO concluded that 27 out of 65 large public pensions were inadequately funded as of 2006.

The problem, according to pension administrators cited in the article, stems in part from “an increase in pension benefits.”  That is, when the market is doing great and pension funds are flush, state policymakers are tempted to accede to teacher demands to raise benefits.  But when the market drops, the pension benefits cannot be cut.  It’s a one-way street.  Pension benefits may be increased but it is illegal to decrease them.

So, guess who is going to have to pay the pension piper?  Taxpayers.

UPDATE:  Teacher pensions also distort the labor market for teachers by having “spikes” and “valleys” in benefits.  That is, teachers leave a large amount of money on the table if they leave their positions too early and they actually begin to lose pension benefits if they remain in their job too long.  The net effect is to keep some teachers who have lost their fire for teaching in the profession too long and to drive effective and experienced teachers out of the profession too early.  See a great piece on this by my colleagues Bob Costrell and Mike Podgursky in Education Next.

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Posted by Jay P. Greene

Bad Timing

October 19, 2008

Just days after I wrote about how teachers enjoy exceptional job security, even in hard economic times, the Dallas Independent School District (DISD) lays off 375 teachers.  The 135 stories about it found by Google News emphasize the harship and turmoil that these layoffs are causing.

I wouldn’t want to minimize that suffering in any way, but it is worth noting that the layoffs were not caused by tough economic times.  Instead, the teachers were let go to address an $84 million deficit that “was caused by a massive miscalculation in the budget.”  It seems that Dallas public schools had to fire 375 teachers because they couldn’t do the budget math properly.  Maybe they could even out their errors by issuing a press release about the layoffs filled with grammatical mistakes. 

So I guess teachers can lose their jobs.  But, to put it in perspective, this was only 3% of DISD’s teaching workforce and a tiny fraction of the nation’s 3 million public school teachers.  My point that teachers are remarkably insulated from economic downturns still holds, even if a number of teachers in Dallas lost their job due to gross budget mismanagement.

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Posted by Jay P. Greene

What Me Worry?

October 13, 2008

 

We’ve previously discussed how teachers are relatively well-paid and how the structure of their pay does not promote quality teaching.  To be sure, teachers aren’t paid like doctors, but they also aren’t paid like fast food workers.  If computed on a weekly basis, teachers are paid slightly above the average professional specialty and technical worker (the group in which they are classified by the Bureau of Labor Statistics).  But on an annual basis they are paid less.

During these times of economic turmoil and anxiety, it is worth emphasizing a non-monetary aspect of teacher compensation that also adds to the relative appeal of the profession — teachers are essentially guaranteed continued employment with a gradually increasing salary regardless of economic conditions.  That certainty of employment with an ever-increasing wage makes up for some of the perceived or real shortcomings of teacher salaries.  If you don’t believe me, just ask the bank employee, insurance agent, or restaurant manager who are about to find themselves out of a job how much salary they would forsake for the guarantee of continued employment.

Teachers are essentially guaranteed employment despite economic conditions because education spending is almost never cut and, even if it is, teachers are the last thing to be cut within the education budget.  In more than half the states the courts have intervened in education budgets, interpreting vague clauses in state constitutions about an “adequate” or “efficient” public education system as compelling certain levels of education spending.  In those states policymakers dare not cut education spending for fear of being slapped by the courts.  In Arkansas, the court has even compelled the state legislature to increase K-12 education spending by at least the level of inflation.  Colorado has a similar mandate.

No one else has this guaranteed claim on resources.  Even other essential state functions, like law enforcement or road construction can be cut if state revenue drops.  Not education.  They’ll get more almost no matter what.

And within the education budget tenured teachers are essentially guaranteed their jobs and ever-increasing pay.  In almost every school district the contract or state law mandate a step and lane pay schedule that pays teachers more every year they remain employed.  If teachers basically can’t lose their jobs and if the system pays them more each year, they enjoy a benefit that almost no other profession enjoys.  When thinking about whether more tax dollars should be devoted to increase teacher compensation further, we should remember these non-monetary benefits of guaranteed employment with ever-increasing salaries.

I should note that university professors are another occupation that enjoy essentially guaranteed employment, although not with a guarantee of annual salary increases.  And I admit that I benefit from this assured employment, even as I think it has negative effects on higher education.  But at the same time you won’t hear me arguing that university professors are woefully underpaid and are entitled to an ever-increasing amount of tax-payer dollars. 

Right now almost all tax-payers are suffering in their own economic circumstances.  It is just unseemly to see educators demanding more and more even as the pool of available resources becomes smaller and smaller.

2 Comments | teacher pay | Tagged: , , | Permalink
Posted by Jay P. Greene

PJM on Merit Pay in D.C.

September 8, 2008

(Guest post by Greg Forster)

Today, Pajamas Media carries my column on Michelle Rhee’s push for a limited, voluntary merit pay system in Washington D.C.:

To see how much has changed, just consider the amazing fact that about one out of every three public-school students in D.C. attends a charter school — government-owned but non-unionized, privately operated, and (most important of all) chosen by parents — instead of a regular public school. “We lost 6,000 students last year,” says Parker, referring to the number of students who moved from regular schools to charters. Six thousand students is over 13% of the city’s remaining enrollment in regular public schools — in one year.

Rhee isn’t the force behind charter schools or vouchers in D.C. She’s in charge of the regular public system. But the same widespread mandate for reform that made charters and vouchers successful have allowed Rhee to succeed with reforms like closing schools that were only there to create patronage jobs, introducing curriculum innovation, and taking on the unbelievable amount of bureaucratic waste in the system. And as vouchers and charters have sent a message that the system can’t take students for granted any more, the pressure for reform has only increased — strengthening Rhee’s hand.

By coincidence, the Washington Post‘s Marc Fisher has a column today emphasizing how the explosion of charter schools in D.C. was decisive in bringing the unions to the bargaining table, even on the issue of reforming the structure of teacher pay. Just as competition from globalization forced the private sector unions to start the long, slow process of giving up the ridiculous extravegances that they won from management in the 1960s and 1970s, thus rescuing the American economy from disaster, now competition in schooling is forcing the teachers’ unions to start the same process of giving up their own ridiculous extravegances – the biggest of all being a system of hiring, firing and pay that bears no serious relationship to job performance.

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Posted by Greg Forster

Lessons for Arkansas

September 2, 2008

The national media has a few pieces that speak to issues being debated in Arkansas (and I’m sure elsewhere).

New School Buildings

Arkansas, like many states, believes that it urgently needs to spend an enormous sum (more than $1 billion in Arkansas) to improve school facilities.  I’m sure that there are schools in Arkansas that are desperately in need of repairs and replacement, but the need for new school facilities is greatly exaggerated.  The obsession with shiny, new buildings is greatest in my hometown of Fayetteville, where folks covet the mansion-like schools that have recently been built in nearby Springdale and Bentonville. 

But Jay Mathews had a column in the Washington Post  yesterday that observed: “Great buildings don’t make great schools. It might be better if we spent our money on principals and teachers who inspire, who don’t take lethargy or resentment for an answer. Put educators like that in the rickety buildings we have, and stand back.”  Mathews wrote a book reviewing the best high schools in the US and “was astonished at how bad some of the buildings were.”  In the end he agreed with the teachers in those excellent schools: “It is not the building, but the teaching, that makes a difference.”

Fayetteville would do well to take some of the $92 million it was considering spending on a new high school (and why it costs so much is a topic for another day), and devote it wisely to teacher and principal salaries.  I emphasize wisely because across-the-board pay raises without changing the current structure will almost certainly make no difference.  Teachers are not under or over-paid.  They are just paid incorrectly because the pay does nothing to attract, reward, or retain excellent teaching. 

District Consolidation

The major education reform strategies championed by former governor Mike Huckabee was the consolidation of smaller school districts.  Outgoing Senator Jim Argue has even floated the idea of consolidating down to 75 county-wide school districts. 

Recently I’ve questioned consildation as a productive reform, suggesting that unless we want our schools to imitate county-wide districts in Los Angeles or Miami, consolidation is not the answer. 

Now the Wall Street Journal reports that Los Angeles is taking steps to break-up their giant school district.

(edited to correct number of counties in AR)

4 Comments | money myth, teacher pay | Permalink
Posted by Jay P. Greene

Teacher Pay: Size Isn’t the Issue

August 12, 2008

(Guest post by Greg Forster)

On NRO yesterday, David Freddoso, author of The Case Against Barack Obama, launched a broadside against Obama as a faux education reformer. I have no interest in dissecting the details of Obama’s record on education, but Freddoso’s line of attack on the subject of teacher pay seems to me to miss the point.

Freddoso begins by quoting Obama asserting that schools in a Chicago neighborhood were closing early because the district couldn’t afford to pay teachers for a full day. Freddoso notes that teachers in that neighborhood are paid an average of $83,000; more than a quarter of them make over $100,000. (These figures don’t include administrators, who make even more.) Somehow, Obama managed not to mention this when bemoaning the district’s inability to pay for a full school day.

Freddoso may well be right about what’s happening that particular district; I don’t know. However, he goes on to build a more general case that Chicago teachers citywide are making big bucks while the system destroys children’s lives, and therefore Obama’s close alliance with the Chicago teachers’ union is similar in kind to his alliances with Tony Rezko, the Chicago machine, and other practitioners of “systemic corruption.”

I certainly agree with Freddoso that the government school monopoly, in Chicago as everywhere else, consumes large quantities of taxpayer money while destroying children’s lives. I’ll also agree that the teachers’ unions bear a lot of the blame. But is the size of teacher salaries a serious problem?

Freddoso says the entry level salary for a Chicago teacher is $43,702 plus $3,059 in pension contributions. Is that really so much, considering that 1) Chicago is an urban area, where the cost of living will be high, and 2) teachers have to have a college degree and specialized training in order to enter the profession?

Freddoso goes on to note that once these starting Chicago teachers gain four years’ experience, they’ll make $60,000, not including increases for additional education credentials. Since the large majority of teachers do pursue (educationally worthless) additional credentials in order to get these “pay for paper” salary increases, it would be good to know how much those salary increases are worth in Chicago. But setting aside that question, given that the empirical evidence suggests teachers get significantly more effective in their first few years, a bump up to $60,000 doesn’t seem all that bad (remembering again that we’re in an urban area).

In short, while teachers in Chicago – like teachers nationwide – are certainly paid well, they aren’t benefitting from “systemic corruption” a la Tony Rezko or the disgraced management of Fannie Mae and Freddie Mac or the “Friends of Angelo” at Countrywide, all of whom are connected to Obama.

Yet Freddoso writes about teacher pay as though being a teacher is some sort of scam. “Chicago teachers have terriffic pay and hours, and summer vacations,” and we should ask whether Obama’s link to the Chicago teachers’ union is “corrupting,” since this link is “part of a much braoder pattern that characterizes his political career, as with his backing of Chicago’s machine bosses, his sponsorship of legislation and earmarks to help such donors as Tony Rezko, and his support for special-interest subsidies in Washington.”

Freddoso is right that in addition to salary, teachers enjoy extremely strong job protection and shorter work hours, and this should be factored in when we consider whether or not they are “underpaid.” Still, it’s hardly fair to lump them in with Tony Rezko. Moreover, if the issue is not per se whether teachers are well paid, but accountability for the use of taxpayer funds (as the “corruption” meme suggests), then teachers’ job security and summer vacations don’t seem very relevant.

The real problem with teacher pay is not size, but technique. That is, it’s not primarily how much we pay, but how we pay. Teachers in the U.S. aren’t paid like professionals, they’re paid on a factory worker scale, with ability and performance totally unrelated to compensation. (Even calling this a “factory worker” scale is unfair to factory workers, since many factories have now adopted some reforms to the old pre-globalization pay system.) And it’s this pay structure, not the amount we pay, that’s the real problem. The system is designed to attract the lowest performers – since high performers can always earn more elsewhere while low performers always earn more by becoming teachers.

Freddoso mentions the subject of merit pay in passing, but only so he can assert that, on account of his alliance with the union, Obama’s merit pay plan is a toothless tiger. Whether it is or it isn’t, merit pay is a much more important issue than pay levels. If pay were tied to performance, high teacher salaries would be good – in fact, given the large role that teacher quality has been shown to play in student outcomes, if pay (and hiring) were linked to performance I would say the current pay levels would be too low.

Having said I would steer clear of evaluating his record as a whole, I will note that Obama’s openly supporting merit pay represents real progress, even if we agree with Freddoso that this support is only for show. It’s more of a show than any previous Democratic nominee has made, if I’m not mistaken (though I don’t trust my memory too far on this). Obama was actually booed by the NEA when he mentioned his views on differential pay during his speech accepting their endorsement. He didn’t have to mention teacher pay reform in his endorsement acceptance, but he did. That counts for something.

It’s also worth mentioning that the unions benefit far more than individual teachers from the direction the system has been moving in. Over the past few decades, while teacher salaries have stagnated, the number of teachers hired by the system has soared. That’s a mixed bag for teachers – it presumably means less work for each teacher, but it also exerts downard pressure on salaries. However, it puts big bucks in the unions’ pockets, with no real downside for them.

If I had to guess, I’d say Freddoso is overreacting against the widespread claim that teachers are “underpaid.” Since teachers are in fact well paid, this myth certainly does grate on anyone who knows the facts – especially so since this myth is even more obviously at odds with the facts than most education myths, and yet (or perhaps I should say “and therefore”) challenging it tends to produce an especially nasty and vicious response.

But let’s not get drawn into the opposite error. As Martin Luther is said to have said, if a man falls off his horse on the left side, the next time he rides he’ll fall off on the right side. Teachers aren’t paid too little or too much – they’re paid the wrong way. The problem here isn’t teachers, it’s unions.

6 Comments | politics, teacher pay, teacher quality, teacher union | Tagged: , , , , | Permalink
Posted by Greg Forster

PJM Column on the Education Agenda

August 2, 2008

(Guest post by Greg Forster)

I have a column up on Pajamas Media noting that education just flared up in the presidential race recently, and then asking (and answering) the question: Just what can a president do about education, anyway, given that it’s primarily an area of state authority rather than federal?

It’s a question worth asking, because education is going to come up again before this campaign is over. Well, here are five things the next education president (they’re all “education presidents” these days) can do to improve the nation’s schools without expanding federal authority over education beyond its current level.

Leave a Comment » | NCLB, politics, teacher pay, teacher quality, vouchers | Tagged: , | Permalink
Posted by Greg Forster

Teacher Contracts: Blame States, Too

July 30, 2008

(Guest post by Greg Forster)

The National Council on Teacher Quality has published a new report on the sausage-factory process behind teacher contracts. (HT EIA, or as I like to call him, ALELR.)

Readers of Jay P. Greene’s Blog will probably not need to be told that reformers have long identified teacher contracts as one of the most important root causes, if not the single most important root cause, of the system’s ills. It is because of these contracts, for example, that pay scales, quality control and disciplinary procedures in education resemble those of a factory (even a factory circa 1965) more than those of a profession.

Defenders of the system sometimes argue that teachers should recieve the deference that is due to professionals. Personally, I’d love to see that – but not until they’re compensated and held accountable like professionals.

When that day comes, teachers will be able to say, “Now we have freedom and responsibility. It’s a very groovy time!”

Until then, you can’t expect to have one without the other for very long. The universe doesn’t work that way.

Reformers have long argued that the fundamental problem is disproportionate union influence on school boards. Union members have a much stronger motive to vote in school board elections than anyone else, especially when the elections are held separately and require a special trip to the polls. Thus, at contract renewal time the union ends up “negotiating with itself.”

However, the NCTQ report’s main argument seems to be that we should be griping less about the actual bargaining process between districts and unions, and more about the laws passed by state legislatures mandating certain provisions in those contracts. The unions find it easier to extract what they want in the statehouse, NCTQ argues: “As unions have matured, their leaders have realized that it is more efficient to lobby state legislatures on particular provisions than to negotiate district by district every few years as contracts expire.”

The report collects a lot of useful information on the subject, and any contribution to knowledge on this badly understudied subject is valuable. And clearly NCTQ is right when it observes that bad state mandates ought to be deplored alongside bad district/union negotiations, and they currently aren’t.

But if I may play devil’s advocate (“When don’t you?” the unions may ask), I think NCTQ overstates its case on the importance of state mandates vis-a-vis district negotiations.

The report’s opening concedes that “the teacher contract still figures prominently on such issues as teacher pay,” but asserts that “on the most critical issues of the teaching profession, the state is the real powerhouse,” citing how teachers are evaluated, when they get tenure, their benefits, and the notorious issue of firing procedures. But are benefits really that important as an obstacle to reform, so long as compensation is structured on a factory-worker scale? And does the procedure for evaluating teachers matter as an obstacle to reform so long as evaluations play no role in compensation – again because compensation is structured on a factory-worker scale? When teachers get tenure and how hard it is to fire the bad ones are obviously important as obstacles to reform. But are they really so much more important than the factory-worker scale? Whether teachers get tenure early or late is less important than the fact that they get it. Disciplinary procedures only affect a small number of teachers. Even if we include the absence of a more widespread deterrent effect, we’re still not talking about something that affects all or even most of the profession.

I also think NCTQ is barking up the wrong tree when it argues that lobbying the state for goodies is more “efficient” than fighting for goodies district by district. As Hamilton, Madison and Jay (the “Three Founderos”) observed in the Federalist Papers, selfish interests will always find it easier to extract goodies from the public fisc in a whole bunch of little local places than in one big place. While centralization does provide one-stop shopping, it also creates more intense scrutiny and greater opporutnities for opposition.

In fact, in the case of the teachers’ unions, I’m not even sure why it would take more resources to extract goodies on a district-by-district basis. They have to “negotiate district by district” anyway. They get coerced dues payments from millions of teachers precisely to pay the costs of negotiating in every district. And conditions on the ground in those districts are more favorable than those in the statehouse.

Moreover, the old saying goes “the crime is what’s legal.” In this case, the big obstacle to reform is what the teachers don’t have to bother negotiating for: the factory-worker structure of compensation. It’s not like they have to go back and win that all over again every time the contract comes up for renewal.

Finally, it’s not clear that state-mandated and district-negotiated provisions can be separated all that clearly. For example, check out this chart from the NCTQ report, illustrating how the process for firing teachers is mandated by state law in California:

Pretty nice graphic! But check out the contents of the first box:

School district must document specific examples of ineffective performance, based on standards set by the district and the local teachers union.

And the third box:

If the school board votes to approve dismissal . . .

And the fifth box:

School board must reconvene to decide whether to proceed . . .

And the seventh box:

. . . and persons appointed by the school board . . .

And the ninth box:

If . . . the school district appeals the decision . . .

See what I mean? The larger reality of the union/school board relationship will influence the board’s behavior in discipline cases. And the standards for documenting misconduct are subject to union/board negotiations.

I don’t mean to diminish NCTQ’s important contribution here. We should absolutely be paying more attention to state teacher contract mandates. But I think NCTQ goes too far to argue that they’re more important than the dysfunctional school board system.

4 Comments | politics, research reports, teacher pay, teacher union | Tagged: , , , | Permalink
Posted by Greg Forster

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